FedEx indicted in prescription drug probe

SAN FRANCISCO -- FedEX has been indicted by a federal grand jury on charges of shipping powerful prescription drugs for illegal online pharmacies, the latest major company targeted by federal law enforcement for playing a part in the proliferation of such drugs on the black market.

The indictment charges the world's largest cargo company with conspiracy to distribute controlled substances and distribution of misbranded drugs, as well as moves to force the company to forfeit at least $820 million linked to the proceeds from such shipments.

Federal prosecutors accused FedEx of ignoring warnings for nearly a decade from Congress, the DEA and other federal agencies that underground online pharmacies were using its shipping services to illegally distribute prescription drugs such as oxycodone and hydrocodone.

FedEx, the indictment alleges, "departed from its usual business practices" to accommodate the illegal online drug operations, despite pressure to reform.

The indictment is part of a growing campaign against prescription drug abuse, including a summit on the topic held in the Bay Area in May. In another case brought by San Francisco U.S. Attorney Melinda Haag, United Parcel Service last year settled similar allegations, agreeing to pay $40 million after being linked to the sales of shipping prescription drugs sold by illegal online pharmacies.

FedEx could not immediately be reached for comment, but has said in the past that it would not settle because the company does not believe it has committed any wrongdoing. FedEx has previously disclosed in regulatory filings that it has been a target of a grand jury investigation for at least the past four years.

FedEx officials have said the company should not be held responsible for the contents of the tens millions of packages it ships on a regular basis.

The indictment, however, alleges that FedEx for years was aware that two major illegal online pharmacies, the Chhabra-Smoley organization and Superior Drugs, were using the company to ship prescription drugs illegally. Federal prosecutors allege FedEx approved the shipping policies at top management levels, including chief financial officer and the senior vice president of sales.

The indictment did not charge any FedEx individuals with any crimes.

Howard Mintz covers legal affairs. Contact him at 408-286-0236 or follow him at Twitter.com/hmintz